Revenue from cigarette sales goes to UAE offshores

How Belarusian oligarchs’ illegal tobacco business works

On January 21 2021, Lithuanian border guards check a train carrying fertilizers from Belarus. It was indicated on the train cars that the products come from Belaruskali. The border guards already had information that the train can carry smuggled goods. The information was confirmed. Dozens of boxes were found in one of the train cars that contained almost 45 thousand packs of Fest cigarettes with Belarusian brands. The retail price of such cargo sold in Lithuania is almost €150,000.

Šarūnas Černiauskas, manager of investigative project Siena.lt, confirmed: “A huge flow of fertilizers produced in Belarus flows through Lithuania. Mainly they are products of Belaruskali and Grodno Azot. This flow is used for smuggling, and Lithuanian customs officials have also confirmed that the goods of these two companies often get caught with smuggled goods”.

According to Lithuanian customs officials, it is smuggling on freight trains that has become a trend in recent years. In 2020, the customs service confiscated more than 16.5 million packs of smuggled cigarettes worth about €50 million.

It is twice as much as in 2019, kind of a record. Another record was broken on a geographical scale – Belarusian cigarettes accounted for 93% of all cigarettes seized in Lithuania, says the manager of investigative project Siena.lt Šarūnas Černiauskas:

“The flow of smuggling from Belarus is just growing. It’s a trend. And what else can be seen from the public data we analyzed: the batch detained by the Lithuanian services makes up just a few percent of the real smuggling flow from Belarus”.

In many reports, Belarus is called the main supplier of smuggled cigarettes in the region. According to KPNG, in 2018, more than 4.3 billion cigarettes were delivered to Europe from Belarus, and more than 8.6 billion – to Russia. The retail value of these cigarettes is roughly $1.5 billion.

Graphics: Belsat

Economic observer Alexander Zayats considers that: “For Russia, this is a problem, and they publicly admit it. For the EU, this is also a problem, and they claim it. For Belarus, this is not a problem, because the country gets some kind of official income”.

Meanwhile, as our investigation shows, not all the money from the export of cigarettes remains in Belarus. According to the export-import database “Import Genius”, in July 2019, the Emirati company “Petrotrade” supplied the Russian company “Freehouse” with a whole truckload of Fest, Credo and NZ cigarettes produced at the tobacco factory “Neman”.

Graphics: Belsat

As for the company “Petrotrade”, it is located in the free trade zone of Ras Al Khaimah, which is an hour’s drive from Dubai. In this zone, taxes and duties on re-exported goods are not paid.

Igor Tyshkevich, an analyst at the Ukrainian Institute for the Future, is sure: “The United Arab Emirates turn a blind eye to the dubious history of such enterprises, to the dubious history of legalization of certain goods on their territory”.

“Petrotrade” is headed by Dmitri Oleksin, son of an influential Belarusian businessman Alexey Oleksin. Both of them, by the way, have properties in Dubai. As the details of the Emirati company, an account in the Belarusian MTBank is specified, controlled by the same Oleksin.

Graphics: Belsat

The organization’s website is registered to Marius Girzadas.

He is the former head of the Dutch office of the Lithuanian company “Lewben”, serving the offshores of the already mentioned Oleksin.

Graphics: Belsat
Graphics: Belsat

Šarūnas Černiauskas, manager of investigative project Siena.lt, explains:

“Lithuanian company, elite financial company “Lewben” has been working with Alexey Oleksin since at least 2012. It was then that he opened his first Lithuanian business – the “Lexa-Ventures” company, and Mr. Girzadas together with Oleksin are co-owners of this company”.

Several years ago, Oleksin obtained a monopoly on the sale of the products of Grodno tobacco factory “Neman” through his Belarusian company “Energo-Oil”. But, as we see, he sells part of the goods through his offshore company. Moreover, in this whole story with the supply of cigarettes to Russia, we found two inconsistencies.

Graphics: Belsat

First, it is the place of delivery. According to the Federal Customs Service of Russia, in the specified month – July 2019, Russia did import cigarettes from the United Arab Emirates, but the cargo was delivered to Nizhni Novgorod region. Meanwhile, the “Freehouse” office is located in Moscow suburbs, not far from Domodedovo airport, and the duty free shop is in Bryansk region, on the border with Ukraine.

The full text of the investigation is available in pdf, mobi, epub formats.

belsat.eu

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